More universities are going bankrupt, but the best schools are experiencing record wealth

University of Maryland

The Washington Post | The Washington Post | Getty Images

Colleges across the country are in crisis.

Fewer students have returned to school this year, leading to a further drop in undergraduate enrollment of 3.5% from last year, according to a report from the National Student Clearinghouse Research Center.

Combined with declines last fall, the number of undergraduate students in college is now down 7.8% from two years ago – the largest two-year drop in enrollment in the 50 recent years, according to the report.

There is, however, a great disparity between schools, with less selective institutions – and those serving low- and middle-income students – experiencing the largest drop in enrollment.

Community college enrollments have seen the largest declines, now down 15% since 2019, while highly selective colleges have seen enrollment gains – up 3.1% – to return to low levels. ‘before the pandemic.

The consequences of fewer students and less tuition income could be serious, according to Sam Pollack, partner and senior member of NEPC’s Endowments and Foundations practice.

In fact, 62% of higher education leaders said it was the biggest challenge they currently face, according to a recent NEPC survey.

More from Personal Finance:
Less than half of high school students want to go to four-year college
Here are the colleges with the best return on investment
How to Maximize Your College Financial Aid

Already, a number of small schools have had to close completely.

Recently Bloomfield College in New Jersey, founded in 1868, said it may be forced to close after the current academic year.

“Bloomfield College has struggled with declining enrollment for a decade,” Bloomfield President Marcheta Evans said in a letter to the community. “The resulting financial challenges have only been exacerbated by the pandemic.

“And, Bloomfield is not alone,” she added. Judson College in Alabama, Becker College in Massachusetts, and Concordia College New York are also planning to close, among others.

Meanwhile, the country’s most elite institutions are doing better than ever and have the financial cushion to prove it.

This year, a small group of universities, many of which are in the Ivy League, have seen a record increase in applications and net income gains.

These schools have also reported record earnings for their endowments largely through investments in private equity or venture capital, according to Pollack. Some endowments have increased by more than 50%.

As a result, universities such as Harvard, Yale, Stanford, and Princeton are able to expand their financial aid offerings, reducing costs and increasing attractiveness for even more students nationwide.

“They’re often made to be the bad guys, but the vast majority of these institutions are working really hard to deploy these funds for the benefit of students,” Pollack said.

In fact, the best financial aid schools are all private, and their very generous aid programs can make them surprisingly affordable, despite the mind-blowing sticker prices.

“If highly selective schools are able to subsidize this cost, it makes it even more compelling and has broad implications for the higher education landscape,” Pollack said.

At Yale, for example, tuition and fees plus books, room and board have averaged $ 77,750 this year, according to data from The Princeton Review, but the scholarship averages over need. – or the free money – was just over $ 59,000, bringing the total out-of-pocket cost up to about $ 22,000.

“This high sticker cost can be intimidating, but find out the average cost that students and parents are actually paying,” said Robert Franek, editor of The Princeton Review.

“It might end up being cheaper than your local public college.”

But without the same resources, less competitive schools risk losing even more students, widening the gap, Pollack said.

Like what is happening to the nation as a whole, “there is a growing bifurcation between the haves and have-nots and this appears to be true in higher education.”

Subscribe to CNBC on YouTube.

Comments are closed.